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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






2. Ed < 1






3. The total quantity - or total output of a good produced at each quantity of labor employed






4. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






5. Entry of new firms shifts the cost curves for all firms downward






6. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






7. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






8. The difference between total revenue and total explicit and implicit costs






9. The marginal utility from consumption of more and more of that item falls over time






10. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






11. Exists at the point where the quantity supplied equals the quantity demanded






12. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






13. Ed = 8 - infinite change in demand to price change






14. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






15. MUx / Px = MUy/Py or MUx/MUy = Px/Py






16. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






17. Ei > 1






18. Entry (or exit) of firms does not shift the cost curves of firms in the industry






19. When firms focus their resources on production of goods for which they have comparative advantage






20. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






21. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






22. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






23. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






24. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






25. The sum of consumer surplus and producer surplus






26. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






27. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






28. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






29. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






30. The rational decision maker chooses an action if MB = MC






31. The change in quantity demanded resulting from a change in the price of one good relative to other goods






32. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






33. Total product divided by labor employed. APL = TPL/L






34. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






35. The difference between total revenue and total explicit costs






36. Ei = (%dQd good X)/(%d Income)






37. Entry of new firms shifts the cost curves for all firms upward






38. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






39. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






40. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






41. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






42. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






43. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






44. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






45. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






46. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






47. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






48. A good for which higher income decreases demand






49. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






50. Product demand - productivity - prices of other resources - and complementary resources







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